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2017 (8) TMI 942 - AT - Income TaxReopening of assessment - non completing original inquiry initiated u/s 143(2) - Held that - In the paper book submitted by the assessee notice u/s 142(1) of the Act is placed for AY 2009-10 asking the assessee to remain present on 27.08.2010. The page No. 18 of PB is a notice u/s 143(2) dated 29.09.2010 asking the assessee to remain present on 18.10.2010. On the same date the notice u/s 142(1) was also issued. The assessee also replied the notice u/s 142(1) which was submitted before the ld Assessing Officer on 15.10.2010. Meanwhile, without disposing off this notices or passing any order the ld Assessing Officer straightway proceeded to issue notice u/s 148 and ultimately passed an order u/s 147 of the Act. The issue is apparent that AO has invoked the jurisdiction u/s 147 of the Act without completing original enquiry initiated u/s 143(2) of the Act. The above issue is squarely covered by the decision in KLM ROYAL DUTCH AIRLINES Versus ADIT 2007 (1) TMI 138 - DELHI High Court holding that initiation of proceeding u/s 147 under such situation is irregular and illegal - Decided in favour of assessee.
Issues Involved:
1. Legality of the reassessment proceedings initiated under Section 147 of the Income Tax Act during the pendency of proceedings under Section 143(2). 2. Confirmation of the addition of ?1,25,00,000 to the assessee’s income. Detailed Analysis: Issue 1: Legality of the reassessment proceedings initiated under Section 147 during the pendency of proceedings under Section 143(2) - The primary contention raised by the assessee was that the initiation of reassessment proceedings under Section 147 of the Income Tax Act was without jurisdiction since the proceedings under Section 143(2) were already pending. - The Tribunal noted that the notice under Section 143(2) was issued on 29.09.2010, and the assessee had replied to the notice on 15.10.2010. Despite this, the Assessing Officer issued a notice under Section 148 on 02.11.2010 without disposing of the notices or passing any order under Section 143(3). - The Tribunal referenced the decision of the Hon’ble Delhi High Court in KLM Royal Dutch Airlines Vs. ADIT 292 ITR 49 (Del), which held that initiation of proceedings under Section 147 while proceedings under Section 143(2) are pending is irregular and illegal. - The Tribunal further cited the Supreme Court's decision in Trustees of HEH the Nizam Family Trust Vs. CIT 242 ITR 381, which established that reassessment proceedings cannot be initiated as long as the assessment proceedings on the basis of the return already filed are not terminated. - Based on these precedents, the Tribunal concluded that the Assessing Officer's action of invoking jurisdiction under Section 147 without completing the original enquiry under Section 143(2) was irregular and invalid. Consequently, the reassessment order was quashed. Issue 2: Confirmation of the addition of ?1,25,00,000 to the assessee’s income - Since the Tribunal quashed the reassessment order on the additional ground of jurisdictional error, it did not adjudicate the original ground concerning the confirmation of the addition of ?1,25,00,000 to the assessee’s income. - The Tribunal's decision to quash the reassessment proceedings rendered the original ground moot, leading to the appeal being allowed in favor of the assessee. Conclusion: - The Tribunal admitted the additional ground raised by the assessee regarding the jurisdictional error in initiating reassessment proceedings under Section 147. - The Tribunal quashed the reassessment order passed by the Assessing Officer as it was deemed irregular and invalid due to the pending proceedings under Section 143(2). - As a result, the appeal filed by the assessee was allowed, and the original ground concerning the addition of ?1,25,00,000 was not adjudicated. Order Pronounced: - The appeal filed by the assessee was allowed, and the order was pronounced in the open court on 08/08/2017.
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